3 Types of Pricing Strategies You Should Know About
The good news is you have a great amount of flexibility in how you set your prices, but unfortunately, that’s also the bad news. Indeed, there are certain pricing strategies you should try to avoid, like under pricing and overpricing. While the former is perceived by customers as having less value, the latter forces them to check the competitor’s pricing.
Related: A Simple Secret For Pricing Products to Sell Online
Numerous pricing strategies are based on the study of human psychology. What they do is create a desired perception in the customer’s mind, albeit subconsciously.
Charm pricing is when you end your product’s price with a 9 or a 5. This causes the customer’s mind to automatically round the price down to a lower, more attractive number. For example, a $2.99 or $2.95 price is perceived as being closer to $2 than $3.
So it’s no surprise this strategy has been proven to increase sales.
The Rule of 100
This approach also uses psychology and works by motivating customers to make a purchase by offering them enticing incentives; in this case, percentage amount discounts for items under $100 and dollar amount discounts for items over $100.
The beauty of this particular method is that it’s capable of maximizing the perceived magnitude of your discount, no matter the discount size.
The goal of anchor pricing is to trigger an automatic response in the customer that they’ve found a good deal and should act on it now.
There are two (and probably more) ways to accomplish this goal: Listing the sale price with the original price in the item description or placing a higher priced item next to the lower priced one on your product selection page.
Either way, you help the customer establish the amount of savings they’ll realize by purchasing your product.
Related: Which Is Better: Free Shipping or Lower Pricing?
One of the secrets of business success is pricing your products properly. But you can’t do this without knowing your target customer, tracking how much competitors are charging, and understanding the relationship between quality and price.
Thus selecting the right pricing strategies for your business not only enhances how much you sell, it creates a strong foundation that will prosper over the long run.
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